From the following capital structure of XYZ Ltd. determine appropriate weighted average cost of capital. (i) Equity shares include the existing 60,000 shares having current market value of Rs 40 per.
From the following capital structure of XYZ Ltd. determine appropriate weighted average cost of capital.

(i) Equity shares include the existing 60,000 shares having current market value of Rs 40 per share and the balance is net proceeds from the new issue in the current year (issue price of the share,  Rs 40; flotation cost per share, Rs 5). The projected EPS and DPS for the current year are Rs 8 and Rs 5 respectively.

(ii) Dividend indicated on preference shares is 12 per cent.

(iii) Pre-tax cost of ________. 

Answer rating: 100% (QA)

ANS WER The weighted average cost of capital is 10 71 C AL C UL A... View the full answer